SingTel – BT
Bharti profit rises as price cuts boost wireless use
BHARTI Airtel reported a quarterly profit that beat analysts’ estimates after price cuts helped India’s largest mobile-phone operator boost traffic on its wireless network.
Net income increased 2.3 per cent to 22.1 billion rupees (S$674 million) for the three months ended Dec 31, from 21.6 billion rupees a year earlier, New Delhi-based Bharti said yesterday. That compared with the 21.9 billion-rupee median of 16 analyst estimates compiled by Bloomberg. Sales rose 1.5 per cent.
Billionaire chairman Sunil Mittal’s flagship company slashed call rates to as little as 0.01 rupee a second to keep customers after overseas carriers NTT DoCoMo Inc and Telenor ASA entered the market with cut-price plans. The reduced prices encouraged users to spend more time talking on Bharti’s network.
‘Most people had been more pessimistic than (the) results warrant,’ said G V Giri, an analyst with IIFL Capital Ltd in Mumbai. The earnings reflect ‘lower tariff translating into correspondingly increased traffic,’ he said.
The Indian operator reported that traffic on its mobile network increased in the last quarter by 9.56 billion minutes from the preceding three-month period to 153.2 billion minutes. The number of wireless customers grew 40 per cent from a year earlier to 120.2 million as on Dec 31, Bharti said in the statement.
‘The resurgence of minutes has been a highlight of this quarter,’ chief executive officer Manoj Kohli said in a post-earnings briefing in New Delhi yesterday. ‘This is despite the hyper-competition,’ he said.
Phone companies are reducing prices to get a larger share of a wireless market that is on average adding more than 14 million subscribers every month and is forecast by researcher Gartner Inc to exceed 771 million users by 2013. India had 506 million mobile-phone accounts at the end of November, according to data from the Telecom Regulatory Authority of India, second only to China’s market in size.
The increased competition, at a time when growth in the telecom industry is slowing, is leading to overcapacity, Kotak Securities Ltd, ranked India’s top local brokerage by Asiamoney last year, said this month.
Third-quarter revenue was 97.7 billion rupees, compared with analysts’ median estimate of 97.6 billion rupees.
Bharti is now targeting emerging markets as competition intensifies and growth slows in India’s cities. The operator on Jan 13 named Mr Kohli to head a new team to acquire companies outside the region after it made its first overseas acquisition in Bangladesh earlier this month.
The Indian carrier announced on Jan 12 that it agreed to buy a 70 per cent stake in Bangladesh’s Warid Telecom and will invest US$300 million in the neighbouring South Asian nation’s fourth-largest mobile-phone operator. Bharti last year failed to conclude a US$23 billion purchase of South Africa’s MTN Group Ltd in its second attempt.
Bharti will focus on emerging markets and has no plans to acquire companies in the US, Mr Kohli said yesterday. Competition will ease after a couple of quarters and India’s wireless market will see more stable and orderly growth in the second half of the year, he said.
‘With the pricing regime stabilising, the operators will get back to a more normal environment and Bharti will benefit from its scale in terms of operating performance,’ Theo Maas, who owns Bharti shareholder Singapore Telecommunications Ltd as part of the US$4.5 billion in assets he manages at Fortis Investment Partners Pty in Sydney, said. — Bloomberg